Three lessons about black poverty

The new poverty numbers released by the Census Bureau on September 10th shows the black poverty rate inching upward. The good news is that in 2008 the black poverty rate increased only a statistically-insignificant two-tenths of a percentage point to 24.7 percent. The worst of the recession, however, has been in 2009. The bad news is that next year’s poverty increase will certainly be larger. If we have only weak job creation after the official end of the recession—a “jobless recovery”—then the black poverty rate could increase for additional years.

In recent years, there has been a lot of hot air about black poverty. This is a good moment to clarify what causes blacks to have such a high poverty rate and what can be done about it.

The first important point to emphasize is the crucial link of poverty to the lack of jobs. When blacks lose jobs, as they do during recessions, the black poverty rate increases. The reverse is also true. When there is strong job growth in the country, the black poverty rate declines.

Over the 1990s, there was strong job growth and the black poverty rate dropped 9.4 percentage points from 31.9 percent in 1990 to 22.5 percent in 2000. The black poverty rate in 2000 was the lowest black poverty rate on record. The 1990s decline was the biggest drop in black poverty since the 1960s. It was amazing to see the black poverty rate cut by almost a third in a mere 10 years.

The number one priority in fighting black poverty must be the creation of jobs with good wages. It is unfortunate that no one made a big deal about the 1990s decline in black poverty. The decline in black poverty over the 1990s meant that there were over 3 million fewer poor blacks in 2000.

Looking beyond the recession, the question to ask is “Will we see strong job creation or a ‘jobless recovery’ that causes black poverty to rise or remain high?”

The second lesson is that the United States has such a high poverty rate because we choose to. Similar to the situation with health insurance, all other rich nations do a better job at fighting poverty than we do. In 2000, the child poverty rate in the United States was 1.5 times the rate in Canada, 3 times the rate in France and 9 times the rate in Denmark. All of these countries have a stronger commitment to reducing poverty through progressive taxation. We could do better, but we don’t.

If we had a stronger commitment to fighting poverty we would see better outcomes for black children. A recent study [PDF] by the Pew Economic Mobility Project showed that a large number of middle-class black children grew up to be worse off economically than their parents. An important reason for this downward mobility was because middle-class black children are much more likely to grow up in neighborhoods with high rates of poverty than middle-class white children. Other research also shows that childhood poverty increases the likelihood that children will have negative economic outcomes as adults.

Children who grow up in an impoverished home or in a poor neighborhood are more likely to be poor as adults. If we wish to reduce poverty in the long-term, we have to be committed to reducing poverty today.

The third lesson is that racial discrimination is still an obstacle to black economic success. Audit or paired-tester studies where black and white job applicants present basically the same qualifications in the same way to employers consistently find that the white applicant is much more likely to be offered the job. Among blacks with jobs, researchers consistently find wage disparities also. For example, a recent study from the Urban Institute found that black workers earn 12 percent less than similar white workers in similar jobs.

There are three necessary ingredients to reducing black poverty: (1) strong job growth that reaches black communities, (2) a national commitment to lowering the poverty rate, and (3) a renewed commitment to fighting discrimination in the labor market. Without these three ingredients, we will continue to see a large black-white poverty gap into the future.

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EPI is an independent, nonprofit think tank that researches the impact of economic trends and policies on working people in the United States. EPI’s research helps policymakers, opinion leaders, advocates, journalists, and the public understand the bread-and-butter issues affecting ordinary Americans.